Vernon: Encouraging growth in willingness to resolve claims without going to court

Claimant legal costs paid the NHS fell by £32m last year as the LASPO reforms finally start to show their impact, and formal litigation has been reduced to the lowest recorded level, NHS Resolution said today.

But its annual report said last year’s revision to the discount rate meant that, despite the numbers of new clinical negligence claims plateauing, the cost of claims rose sharply.

Figures for the past year show that the NHS paid out £1.63bn in damages to claimants in the year to 31 March 2018, an increase from £1.08bn in 2016/17. Nearly three-quarters of the increase (£404m) was due to the discount rate change.

The number of new clinical negligence claims reported in 2017/18 was 10,673, just 13 fewer than the year before.

Claimant legal costs fell 6.4% to £467m, while defence legal costs increased 2.5% to £128m. In her introduction to the report, NHS Resolution chief executive Helen Vernon said the costs reforms brought in by LASPO in 2013 “are starting to impact a greater cohort of settled cases”.

“In addition, our sustained efforts to challenge claimant legal costs, where we believe them to be unjustified, led to some landmark decisions this year which will generate multimillion pound savings for the NHS.

“The reduction in claimant legal costs is a welcome development after years of inflation in this area.”

The report explained how NHS Resolution’s legal costs panel, set up in 2015, has helped to manage expenditure on claimant legal costs: “A single panel firm resolved 5,151 cases for us in the financial year 2017/18. The aggregate amount claimed for claimant legal costs was £430.8m and after negotiation the sum of £300.2m was paid.”

There were 16,338 claims concluded in 2017/18. Some 69.6% of them were resolved without formal court proceedings – the highest level to date – and in 44% of them, there was a damages payment.

By contrast, four in five of the 29.7% of cases that settled after proceedings were issued led to a damages payment.

Just 124 cases went to trial, with the claimant receiving damages in 35% of them.

NHS Resolution set a modest target of successfully mediating at least 50 cases through its claims mediation service over the year but ended up completing a record 189.

Ms Vernon said the new early notification scheme for cases of brain injury at birth has “transformed” its approach to such cases “and will provide a test-bed for the government’s proposals in relation to Rapid Resolution and Redress”.

She explained: “We now hear about these incidents from the outset (rather than five to six years later, as had been our experience). For the first time, we have been able to admit liability and provide much-needed financial support to families when it can make a difference, within months of the birth.”

More generally, she said: “The growing interest both from our NHS members and those who act for injured patients in working together to resolve claims for compensation without going to court has been very encouraging and we hope to build on this so that mediation is no longer seen as novel in healthcare.”

But Ms Vernon said that, with the cost of clinical negligence at an “all-time high” – the total provision for all of NHS Resolution’s indemnity schemes was up £12bn to £77bn – there was “a renewed urgency to efforts across government to tackle the drivers of that cost”.

Brett Dixon, president of the Association of Personal Injury Lawyers, said: “NHS Resolution is complaining about the discount applied to large compensation payments.

“That makes very bleak reading because now, finally, injured people are getting what they need. The NHS has been undercompensating for its negligence for many years. It is now simply paying what it always should have.”

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